Since then I’ve mentioned this forecast to all kinds of folks. In August, 2010 I had the chance to point it out to Jeff Bezos, CEO of Amazon. He merely smiled and said, "Oh, you noticed that!" And then smiled again.

Kelly thought that Amazon might operate on a cell phone model where you get a free Kindle if you commit to buy X number of e-books (funny, I would have called that the book club model instead), then he noticed that Michael Arrington once brought up the idea (we covered it at the time) that Amazon Prime subscribers might get a free Kindle.

And it’s not so far-fetched. Prime subscribers tend to order more frequently since they don’t have to factor shipping charges in, and to shift their purchases away from other sources to Amazon out of a psychological need to “get their money’s worth” out of that $80 they put up. If Bezos gives more people reasons to sign up, the added value overall could let Amazon give every Primester a Kindle and still come out in the black—especially if the cost of making them continues to drop.

I’ll say this for sure: if I got a complementary Kindle plus streaming movies and no-cost 2-day shipping out of it, I’d sign up for Prime in a heartbeat, and try to talk all my friends into doing it too. Even if it was just the wifi version, and/or a refurb of last year’s model, that would still be enough added value to put it over the top for me.

Perhaps a more interesting question is whether this sort of marketing coup would convince Barnes & Noble to follow suit. Certainly it’s not been shy about matching Amazon’s price decreases as closely as possible—or even lowering its own prices first. If free or subsidized e-readers start popping out all over the place, that could strike a pretty critical blow to the market for the also-rans that don’t have a huge bookstore chain behind them.

Comments:

“We do have some loyal and tenacious readers who have downloaded over 1,000 books from our constantly updated daily Free Book Alert listings of over 200 books.” Kindle Nation Daily

A somewhat similar projection to free devices would be free book releases. Let’s take this as a trend and also note a possible freedom from proofreading for screen books. Other costs certainly to be noticed by publishers are those that assure customer possession or persistence of the screen copy, so let’s zero those as well.

You can see where this is going; a reconsideration of the commerce and fulfillment features of print.

But it’s a goofy idea from a business point of view. Only some of Amazon’s Prime customers would be interested in a Kindle — some order other stuff, some already have one. They’d be handing out lots of Kindle’s to folks who wouldn’t use or value them.

A much more sensible model would be tying purchases to discounts: for every Kindle title you get, 10% goes to buying your next Kindle. That would also allow Amazon to discount agency books without actually discounting agency books.

People undervalue what is free. I certainly wouldn’t put it past Amazon to offer free Kindles to some of their users, but equating that to ‘free’ is a big stretch. One problem with offering free Kindles to Prime users, for example, is that many of them probably already own Kindles. Which would make them feel like suckers for having paid for something they were going to get for free anyway.

I suspect that Amazon will continue reducing the price until it gets somewhere around $50. At that point, the price will stick and they’ll focus on adding value. Of course, they will offer free units for promotional purposes, but I can’t believe they aren’t already doing that.

The Kindle is not a locked device like a mobile phone. So giving it free doesn’t make sense at this time. If they offered a Kindle that was locked into buying only from Amazon AND that could only display eBooks bought from Amazon then I would see a free device before the end of 2011.

What could look at doing is offering a Kindle for 60 – 70 euros and bundle it with 50 euros of eBook vouchers. I believe this wold make more sense in the absence of a total lock in.

hmm… Linking it up to something like Prime membership makes sense. And it wouldn’t be the first time that a device needed to run content is free or at the least heavily discounted – and agreed there is loads of great free content but some of us are also addicted to the ‘latest’ of whatever is our achilles!
So while I wouldn’t buy a Kindle, if it came free with Prime I wouldn’t be averse to accepting it!

Totally free? Probably not. A lot of people would get one just because it was free, but buy little to recoup Amazon’s hefty costs. Free with Prime? Too great a mismatch. People join Prime to save on shipping or to get free movies. They aren’t necessarily book buyers. At best, they’d pass it on to a friend or relative.

More likely options:

1. Continued price cutting, particularly to below the magic $99 price point for the WiFi version. Advantage: more sales to serious book readers. Disadvantage: still some frugal holdouts.

2. Discounted or free after buying so many books. Advantage: Little risk to Amazon, those who buy will continue to buy. Disadvantage: People like to buy to save on future purchases (i.e. getting ebooks instead of print). This requires them to have bought printed books to save later on ebooks.

3. Save now, must buy later. This is a bit like cellular contracts. Advantage: Many busy readers are buying anyway, so they’d like the offer. Disadvantage: Some don’t liked to be trapped into must-buy schemes.

I suspect #1 is the most likely, since Amazon would just keep doing what is is already doing. Even the reduced and subsidized price would still need to be high enough to limit purchases to those who plan to buy a lot of Amazon ebooks.

There’s another option that’s not being mentioned. That’d be to expand the Kindle feature set just enough to make it more appealing to a larger audience without trying to compete with the iPad or incurring more than modest expense on Amazon’s part. A Kindle doesn’t have to become an iPad to become much more useful than it is now.

Applications such as family-wide activity calendars, to-do lists, and a simple hubby-to-wife messaging plus shopping list system could do that. That’d have the wife (and most Kindle readers are women) getting her hubby and teen kids on the Kindle family account. The more people carrying Kindles about, the more time they’ll spend reading Amazon ebooks on the go. More reading means more buying. Customers are happy and Amazon is happy.

But before Amazon added “free movies” to Prime, they just joined to save on shipping. So if they added a free or highly discounted Kindle to it, then people would join it to save on shipping, get free movies, and/or get a big discount on or a free e-book reader.